RBI to issue sovereign gold bonds in six tranches in H1 of FY ’21

The government has initiated the process of borrowing with the launch of sovereign gold bonds in consultation with the Reserve Bank of India (RBI) in the current financial.

To be issued in six tranches by the RBI between April and September, 2020, the sovereign gold bond will provide assured return of 2.5 per cent to investors a long with appreciation in the price of the bond in line with movement of gold prices.

The bond will be on sale only in the domestic market for subscription by individuals, HUFs, Trusts, Universities and charitable institutions.

As per a press statement issued by the Finance Ministry, the sovereign gold bonds will be denominated in multiples of grams of gold with a basic unit of 1 gram. The tenor of the bond will be for a period of 8 years with exit option after 5 years to be exercised on the interest payment dates.

Subscribers will be allowed minimum investment of 1 gm (value of bond) of gold while maximum level of subscription will be 4 kg of gold for individuals and HUF while 20 kg for trusts and similar entities per fiscal.

The price of the bond will be fixed in Indian rupees on the basis of simple average closing price of gold of.999 purity for the last 3 working days of the week preceding the subscription period. Those taking subscription through online route or other digital mode will get Rs 50 discounts on 1 gm worth of of sovereign gold bond. The redemption of the bond will also be in rupees based on three days average price of gold preceding the redemption request.

The bond will provide SLR cover to bank subscribers. It will be sold through banks, post offices, exchanges and through agents.

Meanwhile the India’s foreign exchange reserves declined by $902 million during the week ended April 3. According to the RBI’s weekly statistical supplement, the overall forex reserves decreased to $474.66 billion from $475.56 billion reported for the week ended March 27.

India’s forex reserves comprise foreign currency assets (FCAs), gold reserves, special drawing rights (SDRs) and India’s reserve position with the Int ernational Monetary Fund (IMF). On a weekly basis, FCAs, the largest component of the forex reserves, edged lower by $547 million to $439.11 billion.

Similarly, the value of the country’s gold reserves decreased by $340 million to $30.55 billion. The SDR value rose by $5 million to $1.42 billion. In addition, the country’s reserve position with the IMF went down by $19 million to $3.56 billion.

India’s foreign exchange reserves rose by $5.65 billion during the week ended March 27.

According to the RBI’s weekly statistical supplement, the overall forex reserves increased to $475.56 billion from $469.90 billion reported for the week ended March 20. India’s forex reserves comprise foreign currency assets (FCAs), gold reserves, special drawing rights (SDRs) and India’s reserve position with the International Monetary Fund (IMF).

On a weekly basis, FCAs, the largest component of the forex reserves, edged- up by $2.56 billion to $439.66 billion.

Similarly, the value of the country’s gold reserves increased by $3.03 billion to $30.89 billion. The SDR value rose by $14 million to $1.42 billion.

The Reserve Bank of India has announced new measures to ease the compliance burden on sectors of the Indian economy most affected by the coronavirus scare.

Accordingly, it has extended realisation period of export proceeds to give more time to exporters to comply with regulations.

Presently, the value of goods or software exports made by exporters is required to be realized fully and repatriated to the country within nine months from the date of export. The time period for exports made up to or on July 31, 2020, has been extended to 15 months from the date of export.

“The measure will enable the exporters to realise their receipts, especially from COVID-19 affected countries within the extended time period and also provide greater flexibility to them to negotiate future export contracts with buyers abroad,” the RBI said in a statement.

Indo-Asian News Service